While our Lake Norman home sales numbers for May did not match May 2013’s record setting sales, they were the second best May since the recession and 8.4% higher than last month’s. Not bad! After struggling since late fall, our real estate market has jumped back to life with surprising strength and velocity and it looks like this will continue into the early summer months at least.
Let’s take a look at the May 2014 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area real estate market:
* All data is from the Charlotte Regional Multiple Listing Service. **Please note that the MLS started using an entirely new program last month which did away with Area 13 so my numbers may vary slightly from the past but I have made it as close as possible.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) represented only 5.5% of Lake Norman’s total home sales which was the lowest since the recession and down from last month’s 9.4, and significantly lower than January’s 29%. We only had 7 distressed home sales in May. The average price for distressed single family home sales was $284,332. Distressed active listings comprise only 2.4% of our total inventory of Lake Norman homes sale. Clearly distressed sales no longer play a significant role in our Lake Norman real estate market and this is very good news!
- 33.6% of our May home sales were waterfront homes which was up from 23% last month and back to where they normally are after a very slow winter and early spring. The average sales price of a Lake Norman waterfront home in May was $777,086. Our average price per square foot, at $256.97, was up significantly from last month’s $216.34 and even our peak of $229 last summer. Clearly we are seeing new life in our Lake Norman trade-up price ranges after a rather long slump!
- 14 new construction homes closed in May through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. (In fact, this segment of the market may be skewing our Lake Norman home sales numbers quite a bit). The average listing price vs sales price of new construction single family homes was 100%. Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 33 new construction homes under contract in the MLS. The average sales price in May logged in at $424,839.
- 43.5% of Lake Norman’s May single family home sales were under $400,000. This is a huge drop from the staggering 59.8% last month. Clearly our higher priced homes are selling again!
- 63.4% of the entire Lake Norman home sales in May were under $500,000 down from 69.4% last month. This means almost 20% of our sales in May were in the $400,000’s!
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 262 were down slightly from last month’s 274. At 262 Lake Norman has 10.5% FEWER homes under contract compared to last year’s 293 at this exact date, while we aren’t quite matching last year’s hot numbers, we have improved immensely in the past two months. We have definitely stopped the bleeding but, like with the rest of the US, it is still going to be really tough to match our strong 2013 sales.
A closer look at the chart:
- The number of Active Listings in Lake Norman is 10% higher than last May’s. Our absorption rate/months of supply of active listings today is down to a relatively healthy 8.1. Last May 2013, Lake Norman hit our post recession low of 5.9 months of supply. So, while we aren’t in a buyer’s market like last year at this time, using the nationally defined goal of 6-8 months of supply for a balanced housing market puts Lake Norman pretty much in a balanced housing market. The number of new listings has slowed and sales have increased both of which are important to Lake Norman’s real estate market.
- Under Contract Show (conditional sales), were up a whopping 14% compared to this same time last year but down from last month’s 196. These are homes that just went under contract (have an accepted offer) and still have financial and inspection conditions. They represent future closed sales most likely in late June/July. This number would indicate that our closed sales will keep improving and we might even beat 2013 in one of the next few months.
- Pending/Under Contract No Show sales are -38% below last May’s making this the ninth month in a row of declines. These are the contracts that are past their inspection/due diligent periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon this I predict that we will most likely not exceed 2013 closed sales numbers this month. However, based upon our new contracts we may have a really strong July/August.
- The number of closed home sales in Lake Norman in May as of today and as stated above, was down 18% compared to last year’s. The average sales price was up 7% and the average days on the market were down 4%.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- June 5, 2014: 262
- May 6, 2014: 274
- April 6, 2014: 243
- March 6, 2014: 187
- February 6, 2014: 185
- January 6, 2014: 155
- December 6, 2013: 197
- November 6, 2013: 207
- October 6, 2013: 207
- September 6, 2013: 218
- August 6, 2013: 264
- July 6, 2013: 271
- June 6, 2013: 293
- May 6, 2013: 316
- April 2, 2013: 290
- March 5, 2013: 255
- February 7, 2013: 219
- January 6, 2013: 184
- December 6, 2012: 197
- November 7, 2012: 214
- October 8, 2012: 218
- September 6, 2012: 206
- August 6, 2012: 228
- July 6, 2012: 234
- June 6, 2012: 235
Here is a breakdown by price-range of our May 2014 closed sales in Lake Norman’s area 13-1 to 13-5:
- $72,000 – $99,999: 2-
- $100,000 – $199,999: 14-
- $200,000 – $299,999: 20+
- $300,000 – $399,999 21-
(These price ranges represented 43.5% of our May home sales.)
- $400,000 – $499,999: 26+++
- $500,000 – $599,999: 15++
(These price ranges represented 31.3% compared to 15.4% last month)
- $600,000 – $699,999: 6-
- $700,000 – $799,999: 5+
- $800,000 – $899,999: 6+
- 900,000 – $999,999: 8+
(These price ranges represented 19%)
- $1,000,000 – $1,499,999: 3-
- $1,500,000 – $1,999,999: 4+
- $2 million+ : 1
(#Solds $1 million+ = 6.1% compared to 7.6% last month, 8.75% in March, 4.3% in February, 6% in January, 9.5 % in December, 4.5% in November, 3.1% in October, 5.7% in September, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April 2013)
The most improved price ranges in March were the up to $100,000?s, $100,000?s, $200,000?s, 900,000?s and the $1 million- $1,499,999
Higher-end home sales in Lake Norman
Mercurial comes to mind when trying to describe our luxury housing market. May was not a great month for closings but we now have 27 properties under contract listed above $900,000.
Lake Norman’s Waterfront Housing Market
As goes our higher end sales so goes our waterfront home sales. We currently have 435 waterfront homes actively listed for sale. With 44 closed sales of waterfront homes in May that means Lake Norman currently has 9.9 months of inventory of waterfront homes for sale. While better than last month, this is still higher than a balanced housing market. I remain baffled by the erratic nature of our waterfront and higher priced home sales in Lake Norman but I do think there are some signs of sustained improvement so hopefully we will keep this up. Folks are gobbling up waterfront tear-downs and if you drive or cycle like I do around the waterfront neighborhoods you will see a lot of new construction on the water. New construction in every price range is beating existing homes in popularity.
10-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers are for single family homes. They come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.** I adjust past months when I do the monthly update as a few more sales are usually input late by agents. ***With our new MLS Matrix program there are some variances in numbers but I am not going to go back to prior years and adjust.
As you can see in our Lake Norman sales by month and year chart above, Lake Norman’s home sales for the 2013 exceeded 2012’s by 19.7% and were only -7.0% below 2007’s. There is absolutely no doubt that 2013 was a great year overall for the Lake Norman real estate market despite the 4th quarter slowdown.
So far in 2014 we are 9.5% below 2013 sales. Through April, the entire country’s home sales were down 6.8% compared to 2013 so Lake Norman seems to be following the national trends overall.
Summary and My Insight
- May’s Lake Norman existing home sales were the second highest May since the recession and 8.3% higher than last month’s
- This is the 3rd month in a row with overall improving numbers. Given the high numbers of newly under contract, sales the next few months should continue this positive trend.
- The average number of days Lake Norman properties took to sell was down 4%.
- The average price of a home sold in May was up 7% from May 2013.
- Lake Norman saw tremendous growth in our trade-up price ranges ($400,000-$600,000) in May and a decline in our bottom price ranges.
- Our number of active listings seems to have plateaued so I am less worried about having too much inventory going into late spring and summer.
- Our Lake Norman home values are stable and slowly improving overall. There are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market. In addition, the lack of distressed sales has led to higher overall average prices. The “bargains” are all but gone. What I really want to see is measurable increases in Lake Norman home sales in ALL price ranges.
- There are pockets of “hot” home sales in the greater Lake Norman area, notably the off-water popular and moderately priced communities in Huntersville, Cornelius and to a lesser extent Mooresville where inventory is very low and multiple offers are not uncommon.
- The number of distressed homes for sale are so low they are truly irrelevant and will not play much of a role in our Lake Norman 2014 sales. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.
- New construction is definitely back. While we only sold 14 new homes last month through the MLS, we have 33 under contract and this doesn’t include custom homes and homes sold directly by the builder/developer in subdivisions. New housing communities as well as custom and smaller groups of spec homes are popping up all over Lake Norman. As I noted above, new construction homes are selling on average for 100% of their listing price.
- Charlotte’s 2013 impressive home price gains have been linked to a significant number of investors taking advantage of low prices in “middle class neighborhoods” and turning them into rentals. They therefore have “inflated” prices. Since Lake Norman didn’t enjoy this surge, our sales are more reflective of a truly stable and slowly improving real estate market based on owner-occupied rather than investors and we are already standing on our own.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Homeowners who went through short sales/foreclosures several years ago are now re-entering the market.
- Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.
- Because sales and prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move than in the past 5 years.
- 2013 was a very good year overall for Lake Norman with a 19.7% increase in sales.
- I am seeing a number of new listings on the market that have been leased for several years as sellers waited for prices and the overall Lake Norman real estate market to improve. As this segment of homeowners re-enter the market they may lead to higher than desireable numbers of active listings.
- I hear buyers and agents complaining that our inventory of homes for sale is “stale”, especially higher prices on the water. Even new listings are many times homes that were on the market off and on for several years. As has always been the case here in Lake Norman, most buyers want new or move-in condition homes. Since new construction pretty much disappeared after the recession, we are now looking at an aging inventory of homes which is why buyers are turning more towards building than in past years.
- Based upon some of their listing prices and recent negotiations I have experienced, I am concerned that these Seller’s confidence may continue to exceed the reality of our market. While the market has picked up and the recession is behind us our prices have stabilized and are expected to increase slowly. Overpriced listings are still sitting. Existing home sales are being challenged by new construction!
- At the same time I am also concerned that some buyers are too focused on older statistics from the recession and are too fearful of paying our current market value. I experienced this back in the mid-1990’s in California as well. Buyers who had lost money and or their homes due to that recession were very nervous about making good offers and in come cases lost out for a year or more before finding the confidence to actually make a successful offer.
- Interest rates are expected to continue to rise in 2014 with some economists predicting they will reach 5% or higher by the end of the year.
- Tightening credits, tougher loan standards and increasing interest rates are expected to impede home sales in 2014
- Lake Norman’s average days a listing takes to sell, while dropping, is still almost double the national average of 56 days.
- Our trade-up and luxury housing niches are still erratic and have yet to gain true momentum unlike the lower price ranges.
- Finding the perfect home has become more difficult because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
- On the flip side, higher-end properties are simply taking much longer to sell.
- No matter how hard I try to provide you with the most accurate and insightful data, it is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and/or picked over inventory or you might not.
My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floor-plan is good, perhaps having to do some painting, new flooring etc. is your best option. While your perfect home might come along, don’t wait too long and don’t dismiss a property if it isn’t perfect. Prioritize: Location, quality and depth of water (if waterfront buyer), lot and floor plan. Then, to determine a realistic price, use VERY RECENT comparable sales in your specific market niche. The selection may not be great but with interest rates near all time lows and prices low but rising it is a great time to buy. With less than 3% of Lake Norman’s current listings being “distressed sales” don’t expect a “bargain” to come along at an unrealistic price. Low-balling, except on distressed properties, really isn’t a great strategy nor will it result in a lower price. To the contrary, it usually serves to offend the sellers and gets the negotiations off on the wrong foot.
Don’t focus as much on the price as on the future marketability of the property. A bargain that has incurable issues that will make it difficult to resale, really isn’t a bargain at all. Be smart!
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